Emal’s annual production stands at about 800,000 tonnes. Rich-Joseph Facun / The National

The UAE's two aluminium smelters are set to merge to create the world's fifth-largest producer with an enterprise value of US$15 billion.

Mubadala and Investment Corporation of Dubai (ICD) are merging their aluminium assets, with the Abu Dhabi investor buying half of the Dubai Aluminium smelter in Jebel Ali.

The joint venture expects to add 2,000 new jobs by 2020 and estimates that a further 6,000 indirect jobs will be created by a growing aluminium sector in the country.

The purchase more than doubles Abu Dhabi's stake in the country's aluminium sector. It makes Mubadala an equal shareholder in Emirates Global Aluminium, a new entity that incorporates Dubal and Emirates Aluminium (Emal), the UAE's two smelters.

It will have a combined capacity of 2.4 million tonnes per year once Emal's current expansion programme is completed next year.

"The creation of a new global industrial champion anchored in the UAE is an important step towards realising our vision for a diversified and sustainable economy," said Khaldoon Khalifa Al Mubarak, Mubadala's chief executive and the chairman of the new company.

Emal's annual production stands at about 800,000 tonnes and will increase to 1.3 million tonnes within the first half of this year once its Phase 2 expansion comes online. Dubal's annual production of aluminium is about 1 million tonnes.

While Emal was a 50/50 joint venture between Mubadala, a strategic investment company owned by the Abu Dhabi Government, and Dubal, the latter was wholly owned by ICD.

The market value of the combined entities, including the completed Emal upgrade, is $15bn, according to Mubadala and ICD.

The companies did not disclose the purchase price of the Dubal stake bought by Mubadala, but Saeed Al Mazrooei, Emal's chief executive, said the deal was set at "fair value".

The new company, Emirates Global Aluminium, will be headed by Abdulla Kalban, the current chief executive at Dubal. He has been appointed as the chief executive and managing director of the new company. Mr Mazrooei will become the chief executive of UAE operations.

The new joint venture is intent on growing its operations. Although it is not clear whether this will be at Dubai's Jebel Ali facility or in Abu Dhabi. Mr Mazrooei said last month that Emal was looking to grow further at its site in the Khalifa Industrial Zone in Taweelah (Kizad).

Emal is an integral part of the strategy to grow Kizad into an industrial hub that is to diversify Abu Dhabi's economy away from hydrocarbons. As one of the industrial zone's anchor tenants, it is intended to attract downstream producers that feed off its aluminium production.

Now part of Emirates Global Aluminium, it faces the challenge of growing in a sector where profitability has slumped because of global oversupply. According to the ratings agency Fitch, between a third and half of aluminium producers are failing to break even at current prices, which fell by 10 per cent in the first quarter of this year.

Weak pricing and a supply overhang are set until at least the end of next year, estimates Fitch, a prospect that does not worry the head of the new UAE joint venture.

"We are looking at the long term. Dubal and Emal are built on long-term forecasts," said Mr Kalban.

Emirates Global Aluminium benefits from cheap natural gas, which accounts for about a third of costs in the energy-intensive aluminium production process.

"We are well positioned in the aluminium business in terms of cost per tonne," said Mr Mazrooei.